In the last two weeks the Government has released three key documents under the Climate Change Response Act 2002 that act as a framework to direct New Zealand’s response to climate change over the next 13 years:

• three five-yearly emissions budgets;
• a final emissions reduction plan to meet these budgets; and
• a draft adaptation plan to build resilience to climate change.

The actions identified by this framework are far reaching and will affect all sectors particularly transportation, planning and infrastructure, energy and resources, agriculture, forestry, and waste management.

The framework provides an indication of what the future could hold for all sectors and what regulatory and non-regulatory methods may be introduced to drive change.  It also identifies opportunities for interested parties to be involved in further consultation to give effect to planned actions.  However, at this stage, feedback is limited to comments on the adaptation plan.

The Government’s first three emissions budgets (from 2022-2025) are similar to the proposals consulted on late last year

The Government has announced its first three emissions budgets which are similar to, but not the same as those which the Government consulted on late last year.

• Budget 1 (2022–2025): 290 megatonnes of carbon dioxide equivalent greenhouse gasses (72.4 megatonnes per year).
• Budget 2 (2026–2030): 305 megatones (averages 61 megatonnes per year) [in principle].
• Budget 3 (2031–2035): 240 megatonnes (48 megatonnes per year) [in principle].

The budget for 2022-2025 matches the Climate Change Commission’s advice.  The budgets for 2026-2030 and 2031-35 are slightly more ambitious than both the Climate Change Commission’s advice and the budgets consulted on by the Government in 2021.  In any event, they will be reviewed in 2024 and 2029 in light of progress made on actions in the Emissions Reduction Plan, explained below.

The Government’s plan to meet these budgets and reduce emissions is comprehensive

After a delay of approximately six months, the Government has released New Zealand’s first Emissions Reduction Plan (Plan).  It sets out the Government’s strategy to achieve the emissions reductions needed to achieve the emissions budgets.

The Plan contains approximately 300 actions across a broad range of sectors.  A number of these actions are broadly stated.  In some cases, details of how the action will be achieved has not yet been determined or is in development and in other cases implementation is already in train.

The Plan provides an indication of what the future could hold for all sectors and what regulatory and non-regulatory methods may be introduced to drive change.

Below are some of the key sector actions identified in the Plan.

• Agriculture: The sector contributes over 50% of Aotearoa’s gross emissions, so these emissions need to reduce to achieve New Zealand’s 2050 target.  An emissions pricing mechanism will be developed and implemented for agriculture emissions by 2025, and nearly $340m will go into setting up a Centre for Climate Action on Agricultural Emissions to research ways technology can be used to reduce methane on farms.  Producers will also be supported to make changes, such as the introduction of climate-focussed extension and advisory services and funding of tikanga-based programmes.
• Transportation: Transport is one of Aotearoa’s largest sources of emissions.  The Government’s long-term vision is reducing transport-related carbon emissions and establishing a more accessible and equitable transport system that supports wellbeing.  To achieve this the Plan is to rapidly adopt low-emissions vehicles, improve EV-charging infrastructure and begin work to decarbonise heavy transport and freight.  A scrap-and-replace initiative and a low-emission vehicle leasing scheme will be trialled to incentivise New Zealanders to make the transition to clean transport alternatives.
• Forestry: Unsurprisingly, the Government’s focus is on the right tree in the right place.  Forestry is seen as a key method to help New Zealand reach its emissions reduction goals while also being important to New Zealand’s bioeconomy.  The Plan is to disincentivise permanent exotic forests, encourage native forests and ensure that the Māori aspirations to lead forestry developments are supported.  A forestry and wood processing industry transformation plan will be developed to transform the forestry sector, grow the domestic wood processing industry and consider options to attract investment in the production of low-emissions wood products and biofuels
• Energy and industry: The Government considers this sector is well-positioned to tackle emissions due to existing high levels of renewable electricity.  A strategy and targets to guide further decarbonisation efforts will be set, including a target for 50% of total final energy consumption to come from renewable sources by 2035.  The Government will also develop a strategy to address challenges in the energy sector and signal pathways away from fossil fuels.  Other key actions include improving business and consumer energy efficiency through a number of established programmes, ensuring the electricity system is ready to meet future needs, and reducing our reliance on fossil fuels and exposure to volatile global fuel markets by supporting the switch to low emissions fuels.
• Planning and infrastructure: Decisions about land use, resources and infrastructure are seen as important in determining Aotearoa’s emissions pathway.  Key actions include the changes to the resource management system already underway, addressing infrastructure funding and financing challenges to develop low-emissions urban environments and efficient infrastructure use as well as integrating climate mitigation into central government decisions on infrastructure.  Innovation in low-emissions, liveable neighbourhoods will be promoted through Crown-led urban regeneration projects, and work will be undertaken to identify ways to support the private sector to deliver lower emissions development.

Adaptation is also on the agenda

The Government has also recently released a draft of its first adaptation plan Te mahere urutaunga ā-motu: Draft national adaptation plan (Draft Adaptation Plan) setting out proposals for how it proposes to adapt to the impacts of climate change and address climate risks over the next six years.

It is clear from the proposals that the costs associated with adaptation will not only be borne by central government but will be shared with local government, homeowners, business owners, banks and insurers.

A National Climate Change Risk Assessment previously identified 43 priority risks from the impacts of climate change, such as risks from sea level rise, risks to drinkable water supplies due to changes in rainfall, and risks to buildings due to extreme weather events, flooding, and fires.  Those risks have been used to determine the Draft Adaptation Plan’s three main focus areas which include:

• Institutional reform to be fit for a changing climate;
• The provision of data, information, tools, and guidance to enable everyone to assess and reduce their own climate risks; and
• Embedding climate resilience across government strategies and policies.

Some of the key proposals are set out below.

• Managed retreat legislation: Separate from resource management and three water reform, legislation will be proposed in one to three years focussed on managed retreat.  That is, enabling the re-location of assets, activities and sites of cultural significance away from areas at risk of climate change and natural hazards within a planned period of time.
• The costs of adaptation will be shared: As noted above, the Government considers that the costs of adaptation will be shared across a number of key groups who are significantly at risk of a changing climate.  These groups include, but are not limited to, asset owners, banks and insurers, and local government.
• Information on climate risk will be more freely available: Transparency needs to be improved.  Better public access to up-to-date and relevant information on climate risks such as the latest climate projections data needs to be provided.  Guidance is also proposed to help people assess and manage their own climate risks.
• Flood insurance may be introduced to respond to flood risk: Further work is proposed to develop options for home flood insurance given the increased risks associated with flooding and improved risk information.  The Draft Adaptation Plan is seeking feedback from New Zealanders on whether the Government should have a direct role in supporting flood insurance as climate change risks cause private insurance retreat, and if support is to be provided, what it looks like.  This feedback will inform the initial stages of policy development for the proposed Climate Adaptation Act.
• More research is proposed: The Government proposes research into understanding the impact of climate hazards on property, preparing guidance for owners and builders to understand adaptation requirements.
• More funding proposed:  The Draft Adaptation Plan proposes to invest in climate change initiatives such as the Climate Emergency Response Fund and the Sovereign Green Bond programme.  The Response Fund is made up of $4.5 billion in proceeds from the New Zealand Emissions Trading Scheme with the intention to meet Aotearoa’s climate objectives, such as moving to low emissions and a climate resilient economy.  It also refers to a late 2021 government announcement of a Green Bond programme that will issue sovereign Green Bonds to raise finances for low-emission and environmental projects, such as renewable energy or reforestation.  This approach has been used overseas for many years to support climate-friendly initiatives.

Feedback on the Draft Adaptation Plan can be provided until 3 June 2022.  This provides an opportunity to consider practical and financial implications of these proposed changes, to consider whether there are any other relevant challenges and opportunities that the Government has not addressed and provide submissions on whether the approach is fair and reasonable.

We can help you

If you have any specific questions about the content of the Emissions Reduction Plan and the Draft Adaptation Plan and how they will impact you and your business, or if you would like assistance to provide feedback on the proposals in the Draft Adaptation Plan, please get in touch with one of our experts.

This article was co-authored by Holly-Marie Noone a Senior Solicitor in our Environment team.